Here's some eclectic, and somewhat mundane, yet interesting thoughts and happenings from my time out here in Kenya. I am spending my summer supporting SIDAI Africa Limited, a for-profit social enterprise which seeks to set up a franchise network of agricultural input retail stores tied to veterinary service providers, to transform the way farmers take care of their livestock in Kenya.
I am back in Nairobi, sitting on the balcony of my apartment on a chilly evening, staring at the Yaya Twin Towers in Kilimani - a nice (and wealthy) suburb just 10 minutes away from Nairobi's Central Business District. The Yaya Twin Towers are part of a large high-end mixed-use real estate development, one of the dozens which have sprung up in Nairobi, and pay testament to the city's growing prosperity. What is odd though is that while one twin tower is complete, occupied and fully lit up, the other one is structurally complete, but unfinished and abandoned. In fact, it is an eye sore with its hollow windows and raw grey concrete walls.
The story I've heard is that the contractor had a dispute with the real estate developer, and it got so serious that the contractor poured concrete down the elevator shafts, rendering the entire building unusable. It takes a lot of spite and emotion to do something like that - it just does not seem economically rational at all, no matter how serious the dispute. We're talking about incurring quite a bit of "concrete" cost yourself in order to impose a cost on someone else. I suppose some things are just settled emotionally. Another version of the story has to do with building permits, zoning regulations and regulatory troubles. Whatever the real issue, it reminds one just how risky (and irrational) doing business here in Kenya can be.
I have just spent 3 days "out in the field" - social sector jargon for anything that is outside of an office in a major city (it's seldom an actual "field"). I was in and around Eldoret, one of Kenya's 10 or so large towns, with a population of 200 thousand. Eldoret is right in the middle of the (Great) Rift Valley, and Kenya's agricultural belt, which makes it significant for any agriculture focused enterprise. It was SIDAI's first distribution hub, and in spite of setting up another three distribution hubs, Eldoret still accounts for two-thirds of the company's turnover.
In Eldoret, I was leading two of my four "Strike Forces" - a fancy, action oriented title we have decided to give to the teams I am working with on my four projects here at SIDAI. Just as an example, one of these projects helps SIDAI build systems and capabilities for stock reordering. At the moment everything is done manually and on "gut feel". And while the human gut (or brain) generally does a good job, it has a basic tendency to forget, and misperceive things - and who can blame it when the organization is stocking 1200 or so SKUs (stock keeping units - retail industry jargon for product and pack-size combinations) - that's a lot to manually manage and keep track of! Plus the folks here at SIDAI responsible for stock reordering have never formally learnt lean inventory management principles, even though they intuitively understand and apply many of them. So I get to put into practice some of the real sciency stuff that I have learnt in Base Operations class at Stanford GSB. The MBA's hard learnings do come in useful, after all.
This morning we drove 280 kilometers (175 miles) North-East of Eldoret, to visit and interview 4 of SIDAI's franchisees. That's a lot of driving considering that several stretches of the road were absolutely terrible. It's a beautiful part of Kenya and what made the drive even more pleasant was the inspiring company and interesting places and happenings along the way. Dr. Odede, SIDAI's Operations Manager was in the driver's seat - and our travel companions included Kellen, SIDAI's Store Manager for Eldoret, and Kandia, SIDAI's franchisee from a beautiful little place called Kerio Valley.
Kandia is an incredibly inspiring person. In Kenya, one's status is determined by one's size - both weight and height, but especially weight. The heavier one is, the more presence and importance one typically garners. But Kandia is not particularly tall, and in fact quite lean - yet he has an incredible presence and strong gravitas. He is quite smart and well educated, and when he speaks, people listen. We had rich conversations in the car about everything from his adventures with bee-keeping (he seems to be a self-trained expert), to Kenya's New Constitution and devolved Governance structure - especially what it means for the country's development. We even talked about the social sector and broader development in Kenya, and how some of the Government and social sector projects can be counter-productive, and create dependence rather than sustainable development. I was pleasantly surprised to hear terms like "hand-outs" and "non-market actors" being thrown around. In spite of the country's myriad problems, many smart and educated Kenyans do actually seem to understand what is happening around them very well.
Kandia set-up his franchise store only two years ago, after retiring from a long career in the private sector, working for an agricultural inputs manufacturer. He found a location on a stretch of road, which does not have another agricultural store for at least 30 kilometers in either direction - he literally picked-out "white space". And while he is currently only turning over US$2,000 or so a month (not a lot - an average SIDAI franchisee can turn over US$5,000), he has a bold vision and sees his store's sales multiplying as he helps develop farmers around the area. He claims that the soil and conditions around his store location are perfect for some very high value horticulture crops, like mangoes and watermelons - and he is willing to invest his own time and capital to help farmers learn to plant these crops. It's a great example of how one smart, educated and enterprising local individual, with a bold vision, can help change the destiny of an entire community. And as a pure private sector player he will likely develop a sustainable and mutually beneficial long-term relationship with the community, and is thus likely to be more effective than any non-profit, especially the likes of Technoserve.
One of the other topics of discussion was the Watermelon seed shortage in Kenya. Kenya is a big producer of watermelons. Three fruits - bananas, pineapples and watermelons - are served in large quantities in any Kenyan hotel buffet. But apparently the East Africa Seed Company has only managed to import 600 kilograms of watermelon seed this year, and is struggling to source more from its global suppliers. And as the planting season approaches, the demand for the seed is in the tens of thousands of kilograms. It's an extreme situation which necessitates strict rationing - and SIDAI is struggling to source these seeds. Perhaps next years' hotel buffets will be missing one of the three fruits.
But Kandia managed to get hold of some seeds using his connections, which left our SIDAI colleagues dumbfounded, and even impressed. It just underscores the importance of building networks and informal connections in order to be successful in this market. In a similar story, one of SIDAI's suppliers was being difficult, refusing to deliver to SIDAI's Eldoret hub (there's a lot of competitive dynamics with SIDAI's model which make such interactions not uncommon). But SIDAI's CEO had worked at the supplier before, and simply made a phone call to an old colleague there. Within minutes a phone call came back from the supplier and everything was in order.
I often wonder whether foreign or expatriate social entrepreneurs are at a serious disadvantage in places like Kenya because they lack family, and broader social networks which take years if not decades to develop. And this problem is compounded when expatriates stay relatively insulated in their own communities, rather than making an effort to get to know and relate with Kenyans. The problem almost certainly exists, but is perhaps not particularly noticeable from their vantage point. After all, an expatriate entrepreneur would have figured that there were no watermelon seeds to be had, would have played by the rules and constraints, and would have ultimately been plugged out of or ignorant to the kinds of things someone like Kandia could achieve.
Kandia's store is also an M-PESA agent. M-PESA is a mobile money platform which serves as a virtual bank account and a domestic money transfer or remittance service. In fact there are twice as many M-PESA users as there are bank account holders in Kenya, and by some estimates, almost 25% of Kenya's GDP is being transacted on M-PESA. He claims that the M-PESA agency helps complement his core agricultural retail business, by helping provide fresh money or liquidity to his customers. They come and withdraw money from the M-PESA agent, money usually sent by their kids or relatives working in the towns, and immediately spend it on agricultural goods and supplies at the store. Absolutely brilliant!
Kandia also stocks M-KOPO solar lanterns, an innovative new solar solution which combines mobile money with solar, to break down the upfront investment that is required in any solar system. It's sort of a pre-paid solar system that can be topped-up on a running basis using mobile money. In my view, it's the most refreshing of the 100 or more otherwise virtually identical solar products which are now out in the Kenyan market (they're literally all generic - even sourced from the same suppliers up in Shenzhen). He says that they're moving fast (i.e. selling a lot).
But I was surprised to hear of the generous trade and credit terms which M-KOPO has extended to him (at least SIDAI is not that generous - but to be fair, SIDAI's product value chains are much better established). I guess it is important for them to do so in order to help move their products. Yet I see so many social entrepreneurs making the mistake of being too stingy with the terms they provide to their distribution channel partners - and then they complain that their products don't gain any traction. It's a very simple story of push vs. pull driven by channel incentives - there are real and important lessons to be learnt from players like M-KOPO and their distribution outcomes on the ground here in Kenya, which fresh social entrepreneurs often fail to tap into.
As we drove along the winding roads, the landscape was quite scenic. We passed by Torok Falls, a tall waterfall on the edge of a lush green mountain. What was particularly great about this waterfall was that it appeared out of the blue, and was visible from across a long stretch of the road. It was at least 100 meters tall, if not more, and double storied (i.e. it fell onto a ledge or terrace, and then fell again) - a refreshing sight for the eyes. There were many sign boards around it offering guided treks along the hill - when I am back next time, I am definitely setting aside time to hike around.
Some of the views from the hills looking down onto Kerio Valley were absolutely stunning. The middle of the valley is home to a small-sized lake and a game reserve. The lake is home to hundreds of crocodiles - and it is possible to lodge on its edge and spend time with the crocs. From another stretch of road, we could see the absolutely massive and serene Lake Baringo, with its giant island hill in the center. Lake Baringo is one of the dozen or so "Rift Valley Lakes", pools of water gathered up at different spots in the depressions of the Rift Valley.
Acacia trees and shrubs lined the roadside, a quintessential part of the African landscape. At one point we saw a runner dressed in tights, and somewhat proper looking athletic gear running along the road. He was not a school boy returning home, but a proper looking athlete in his 20s, wearing some fairly high end running gear. The first runner was interesting to see, but then runner after runner kept showing up. In fact, there were even Caucasian runners, running along the road.
We were near a town called Iten, which is home to the International Athletics Federation's high altitude training facility. This is the place which tends to produce many of Kenya's marathon World Champions. In fact, all of Kenya's marathon champions hail from a single tribe, the Kalenjin Tribe, which is settled in this part of the country, and is one of Kenya's 14 larger tribes. Kandia is in fact a member of this tribe - and the joke goes that there can never be a heavy Kalenjin because of their athletic genes, which perhaps explains why Kandia is also so lean (in spite of the massive blob of Ugali he ate for lunch - Ugali is a maize cake, which is absolutely tasteless in every way, and heavy enough to induce a comma). And it's not just genetics - the high altitude and rolling hills in this part of the country build breathing capacity and stamina from a young age. These are perhaps the best training conditions in the world for long-distance runners - right in the middle of this part of rural Kenya. Fascintating stuff!
Dr. Odede, SIDAI's Operations Manager was another inspiration. As we were driving down a stretch of road, he suddenly pulled over to the side and reversed back towards a field where a girl in her teens, and dressed in a school uniform, was sitting down. He postulated that she was menstruating, and because she probably could not afford a sanitary pad, she was staying away from school, and hiding out there. It's a really depressing state of things - so many girls drop out of school because of this issue. We drove up to the next store along the road, bought some sanitary pads and brought them back. By the time we got back, the girl had disappeared, and the local community had gathered up and asked us to leave. Apparently girls are forced to sell their bodies, just so that they can buy sanitary pads, and the community suspected that Dr. Odede was interested in taking advantage of the girl. It's a really sad misunderstanding - in the end we could not actually help the girl. Sometimes there are real structural trust issues which hamper good efforts in the social sector. Separating the good from the bad is non-trivial.
Another heart-warming Dr. Odede moment took place in a small market town called Mogotio, where we were visiting another SIDAI franchisee. Now lots of interesting things happened in this town. A massive convoy led by the self-proclaimed Kenyan Prophet, Dr. David Owour made a huge racket as it passed by the store, and preached its message. I had never heard of this prophet before - as I inquired about him, Dr. Odede and Kellen shared stories of people they know who were persuaded to sell all their assets and hand them over to the Prophet's Church in the hope that they would be rewarded with even more. Superstition is by far the most successful Base of the Pyramid business tactic.
But coming back to Dr. Odede's moment - we got back into our car and were ready to leave the town as several kids between the ages of 5 and 10 ran towards us, asking for money. This is not uncommon across Kenya and I have developed a habit of ignoring these kids, because whatever money I might hand over to them will not help them in any structurally sustainable manner, and may in fact incentivize them to ask for more, the next time any foreign visitor is in town. This cycle of dependency and even entitlement is ultimately harmful.
Dr. Odede seemed to follow the same policy - I assume that everyone with experience in this part of the world ignores the kids. But there was one particular kid to whom Dr. Odede handed over 10 shillings, which is a little more than 11 US cents. When I asked him why that kid in particular and not the others, he responded that the kid was actually hungry, and that he could tell this from the way he looked. The rest of the kids, according to Dr. Odede would have just wasted the money on chocolates or Bubble Gum, but this kid in particular really needed the money.
So while the rest of us would have put in place a blanket policy across all these kids, and not even bothered to look directly at them, perhaps out of guilt and perhaps out of the frustration of having to deal with them, Dr. Odede still had the perceptiveness, energy and courage to try to find that one kid who might in fact really benefit from the money. Now some part of me is skeptical of Dr. Odede's ability to pick the right kid out, but his gesture still makes me feel a little ashamed of myself.
As we rushed back to Eldoret Airport to make it in time for my flight back to Nairobi, it was pouring rain. Traffic was slow, and the road was muddy - but all this just seemed to add to the charm of the experience. We made it to the check-in counter literally seconds before it was about to close. And Eldoret has the cutest little airport - the fact that it is so small makes it so refreshing to use - just one little hall divided up into all the little things an airport needs, like check-in counters, security check-points and lounge areas. If only every airport could be like this.
The 35 minute flight to Nairobi was prolonged by another 15 minutes, because Nairobi Airport's runway was congested. The Government wants to invest in a badly needed 2nd runway on land that was originally ear-marked for the airport's expansion, but squatters have settled there. Evicting them will create a huge uproar, and the squatters have an incentive to hold-in and resist eviction as much as possible. I guess, there's a price to pay for democracy, a free press, and societies which value distributive justice - literally in the extra fuel and time spent up in the air. And airlines, which are a critical enabler for economic development, will be less likely to serve the Nairobi route because of these issues - overall output, in the utilitarian sense, will be sub-optimal, which is again a depressing state of affairs, especially for such a poor country.
Finally, as I landed in Nairobi and was waiting for Benson, my taxi driver, to come pick me up, I heard a loud roar and cheer in the adjacent international terminal. Apparently the President, Uhuru Kenyatta, had arrived back in Nairobi. As Benson pulled in to pick me up, we scrambled to try to beat the President out of the airport. Benson told me that if we fell behind, we would be stuck there for a long time, as roads are typically completely blocked out for the motorcades of important public officials. Ultimately we did beat him, and my taxi driver who is generally quite jolly, was especially elated this time. Not only had we avoided "the jam" but we were also taking advantage of open signals, which were being used to clear the roads for the President's approaching motorcade. I guess we were lucky which was a good reason to be happy, but I was more angry that public officials have to be so privileged in this country.
Just another day here in Kenya! I suppose that the little mundane things one experiences here can be quite interesting. These are some of the benefits of living in an emerging market!
Great read! Keep 'em coming. Hope all is well over there. - Mike Jelinske
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